Saying “Farewell” to an Industry Giant, Women’s Equality Day, Equal Pay for Superior Play, Private Letter Ruling, Fee-Based Life, and Recession Worries/Sequence of Returns Risk

In Memoriam

On Thursday, October 3 Envestnet founder and CEO Jud Bergman and his wife Mary Miller-Bergman were tragically killed in an automobile accident in San Francisco. An impaired driver reportedly entered Highway 101 travelling in the wrong direction and struck their taxi, killing herself, Jud, Mary and their driver. RetireOne board member Russell Parker worked with Mr. Bergman at Nuveen, and offers this reflection:

Under these regrettable circumstances, we can honor what Jud did for the financial services industry. After successfully building offerings at Nuveen for advisor-assisted distribution, Jud had a vision for a more holistic relationship between financial advisors and their investor clients and built what proved to be the preeminent turn-key asset management platform. His commitment to the pairing of technology and the human touch distinguished Envestnet among the many competitors in the “dashboard” space.

On a personal note, as one who worked with and built a long-term friendship with Jud, I feel confident that he would want his memory to remind others in our industry to think out of the box and commit to the long-term needs of the client.

The accident was preventable and serves as a reminder of the fragility of life, and, more importantly our personal responsibility to others.

—Russell M. Parker, CIMA

Equal Pay for Superior Play

Women’s Equality Day was observed on August 26th, the 99th anniversary of the ratification of the 19th amendment, and more than a month after the United States Women’s National Soccer Team stitched another star to their jerseys. A 2 – nil victory over the Netherlands in July secured their fourth world cup in nearly three decades of competition—and their second in a row. Amazing.

Women's World Cup

Their impressive 2019 World Cup Championship run shone a bright light on veteran standout Megan Rapinoe, and phenom Rose Lavelle, but it also amplified their call for equal pay. Arguments in a class action suit filed against U.S. Soccer from March center around how their unparalleled success has not equated to salaries that are on a par with the U.S. men’s team.

It is hard to imagine a time before Title IX and the benefits it has conferred on women and girls. Unfortunately, those benefits do not appear to include fair compensation. Yet.

While they are making strides, American women have been marginalized in subtle and not-so-subtle ways. Writing in InvestmentNews in July, Mark Schoeff says that women whose spouses control the finances may be putting themselves, and their families at risk. He cites a UBS poll that found 54% of American women said their spouse(s) handles all of their finances.

Many women simply aren’t invited to the table, which is why Sallie Krawcheck and Ellevest created an investing platform aimed only at women. A simple text box on the platform’s website follows a powerful statement with a rhetorical question: “Women typically live longer and we’re paid less. Shouldn’t we use financial tools for us?”

Women were granted the right to vote 99 years ago. It seems like such a short time for them to have been invited into our democracy, and yet such a long time for all of the inequalities to have yet been unwound…

IRS Private Letter Ruling is “Game Changer”

In August, a consortium of insurance companies, including many of our platform partners, announced a private letter ruling from the IRS granting tax relief to annuity-owning clients of registered investment advisors. The ruling allows fees to be billed directly from fee-based, non-qualified annuities. But there are some limitations advisors should understand.

This news should boost adoption of annuities among RIAs who have struggled to incorporate them into client plans because of taxes on billing, cost and other clunky barriers that have been overcome in recent years. Will fee-based life insurance offerings follow suit?

RetireOne president Ed Mercier tells Warren Hersch in Life Annuity Specialist that “Permanent life products with general accounts, like whole and universal life insurance, may not make explicit the fees in the products, including mortality and expense charges. Advisors need the charges to be transparent.” So there’s work to do.

This landmark PLR comes at a time when it seems like financial regulations and legislation aimed at protecting consumers are rolling out and being challenged with increasing regularity. The latest victim may be RegBI. Even the CFP Board has announced plans to delay their fiduciary standard as Edward Jones and others try to figure out a way forward.

Recession Worries and Sequence of Returns Risk

The Fed lowered rates in July for the first time since 2008 amid signs that the economy may be slowing. Markets fell sharply in response to what some perceived as mixed signals from Fed Chair Jerome Powell. Bloomberg reported a week later that the “yield curve signaled loudest warning since 2007,” prompting more talk of recession, and a renewed focus on sequence of returns risk.

Poor market performance in the last five working years and first five years in retirement can lead to losses that are impossible to make up. A recession now could really damage the portfolios of folks at this stage in their lives. We released a report on the impact of sequence of returns risk in July that discusses how next-gen variable annuities with guaranteed living benefits can protect clients in this fragile decade.

Internal costs are lower in these commission-free solutions and offer some tremendous client benefits. Karen Hube highlighted some of this innovation in her annual (expanded) Top 100 Annuities feature for Baron’s. Many of our platform partners made the list: Allianz, Great American, Protective (Great-West), Symetra and TIAA. Tremendous changes are coming to how all annuities are designed, marketed and distributed, and these companies lead the way.

In spite of this innovation, venture capitalist Ben Cukier thinks that most innovation in financial services has been led primarily by fintech’s focus on millennials, even as Boomers are retiring at a rapid pace, and their needs are growing. Focusing on Boomers would bring more decumulation solutions to an underserved market. Are these fintechs ignoring a huge opportunity?

Jackson National Additions to the RetireOne Platform

We welcomed Jackson to the platform in September, and are pleased to add their three valuable advisory annuities to our mix of low-cost, fee-based offerings. Now, RIAs accessing these annuities through RetireOne can replace expensive client annuities with Jackson’s flat-fee variable annuity Elite Access Advisory IISM, protect principal with their surrender-free fixed-indexed annuity Marketprotector Advisory®, and leverage the investment freedom afforded by Perspective Advisory IISM as they aim to design and build durable retirement income streams for clients.

Thank You for Choosing RetireOne

In the third quarter of 2019 these advisors began working with us: Zachary Armstrong, Tom Pace, Shawn Stone, Robby Porter, Patric Piantedosi, Mike Domingo, Michael Thompson, Matthew Desmond, Mark Minarik, Jordan Roach, Jared Walsh, Geoff Curran, Chris Harker, Charles Rossi, Carmen Wong, Brandon Oliver and Bill Owen. New firms in Q3 include Denali Wealth Management Advisors, Oliver Wealth Management, Reservoir Wealth Management, Copper Leaf Financial, Cadence Advisors and Kingsview Asset Management, LLC. Thank you for choosing RetireOne, and welcome to the platform! We have some great news coming in Q4, so keep an eye on your inboxes.

View On-Demand Webinars from Q3

  1. 9 Annuity Use Cases for RIAs
    • Jackson National’s Tyler Dicke uncovers nine unique scenarios where annuities may benefit the clients of RIA firms.
  2. Cut Client fees by 70-80% + Bring Annuity Assets under Management
    • Sr. Managing Director Kevin Hissong explains how RetireOne can help you lower cost, create guaranteed income streams, protect principal, and/or plan for the transfer of your clients’ wealth.
  3. Lifetime Income Solutions for RIAs
    • This webinar explores the ways that fee-based annuities may be used to create reliable, sustainable lifetime income streams and/or non-guaranteed income streams for clients in retirement.

Rest in Peace Mary Miller and Jud Bergman,

David Stone
Founder and CEO